Interface News Reporter | Tao Zhixian
Amidst the overall losses of leading photovoltaic companies, JinkoSolar (68859. SH) still managed to make a profit. In the first half of this year, the total operating revenue of this company was 47.251 billion yuan, a year-on-year decrease of 11.88%; The net profit attributable to the parent company was 1.2 billion yuan, a year-on-year decrease of 68.77%. On a quarterly basis, the company's revenue for the second quarter was 24.2 billion yuan, a year-on-year decrease of 21%; Net profit was 24 million yuan, a year-on-year decrease of 99%.
Jingke Energy's profitable performance report did not lead to an increase in stock price. As of noon on September 2nd, JinkoSolar fell more than 2% to 7.04 yuan per share, only 5% higher than the historical low of 6.71 yuan per share.
Why is JinkoSolar, which has returned to its throne, not favored by the market? What are investors worried about?
Return to the Throne
JinkoSolar is a globally renowned manufacturer of photovoltaic products with photovoltaic industry technology at its core. The company's main business includes monocrystalline silicon rods, silicon wafer cutting, battery preparation, component packaging, etc. At present, the company has established a vertically integrated production capacity from silicon wafer production, solar cell production to photovoltaic module production.
Prior to 2020, JinkoSolar had consistently held a leading position in the component industry. With the rise of Longi Green Energy (601012. SH), JinkoSolar has fallen from grace. In 2023, the company sold 83.56GW of photovoltaic products, including 78.52GW of shipped modules. According to InfoLink Consulting, the company's module shipment volume ranks first in the industry. After a three-year hiatus, JinkoSolar has once again won the global championship.
JinkoSolar's ability to regain its throne relies on new technologies. From 2020 to 2022, Longi Green Energy will surpass JinkoSolar with the opportunity of technological iteration in 166 and 182 silicon wafer sizes; In 2023, JinkoSolar's "heavy warehouse" N-type Topcon battery components will compete in the market at low prices with their production capacity advantages, returning to the top spot in the industry. In the first half of 2024, the company sold approximately 43.8GW of photovoltaic module products worldwide, including approximately 35.9GW of N-type modules, maintaining its position as the world's largest module market share.
A double-edged sword
The resurgence of JinkoSolar is not only due to its own "full voltage" TOPCon battery technology, but also to the replacement track of Longi Green Energy.
In the era of N-type batteries, photovoltaic technology is divided into two schools. BC batteries are represented by Longi Green Energy and Aixu Co., Ltd. (600732. SH), while TOPCon battery technology is represented by JinkoSolar and Trina Solar (68859. SH). TOPCon batteries can effectively undertake the production process of the previous generation of P-type batteries, and the upgrading of old production capacity is smooth. Therefore, the conversion cost of various enterprises is low, which is highly sought after by investors. But its process is more complex than other N-type batteries, and its battery conversion efficiency is not as good as BC batteries. The full name of BC battery is back contact battery technology, where the electrodes in the emitter and base regions are located on the back, achieving a completely unobstructed front without grid lines. This not only improves the photoelectric conversion efficiency of the battery, but also increases the aesthetics of the components. BC batteries can be stacked with other battery technologies, but due to their complex technology, high precision requirements, and difficulty in mass production, their commercialization level is currently lower than TOPCon.
In terms of profitability, Longi Green Energy has signed orders for over 1GW of Hi-MO9 components (using HPBC2.0 battery technology, with a mainstream power of 660W), which are priced about 20% higher than its own TOPCon orders. It is expected that the profitability level will be better than TOPCon products.
JinkoSolar clearly does not agree with Longi Green Energy's viewpoint. The company stated that due to factors such as equipment investment, production costs, and mass production yield, there is still a significant gap between the current BC technology mass production cost and TOPCon, and TOPCon will continue to maintain its cost leadership advantage in the future as technology continues to advance. TOPCon technology will continue to dominate for a considerable period of time in the future, and BC technology is more suitable as a branch route (distributed photovoltaics) for development in the single-sided market.
In terms of scale, TOPCon batteries are far ahead. According to data from Jibang Consulting, by the end of this year, the production capacity of N-type batteries will be about 1078 GW, accounting for 76% of the total battery proportion (the remaining is mainly P-type batteries that are about to be phased out). Among them, TOPCon battery production capacity is about 941 GW, accounting for about 66.3%, heterojunction production capacity is about 76 GW, accounting for about 5.4%, and BC type production capacity is only 60 GW, accounting for about 4.3%.
Overall, BC batteries excel in technology and the excellent conversion rate it brings, resulting in higher gross profit margins; TOPCon has a relatively smaller investment amount and faster commercialization due to its ability to better undertake the production capacity of previous old technologies. At the same time, TOPCon has lower investment barriers and more intense competition between products. At present, except for a few enterprises such as Longi Green Energy, major component manufacturers are vigorously developing TOPCon. Therefore, TOPCon's "roll" is also a concern for investors.
Stop the 'blood transfusion'
In recent years, with the support of capital, photovoltaic new construction and expansion investment projects have been rapidly expanding upstream and downstream production capacity, leading to a large influx of cross-border players and a sharp increase in production capacity in various links in the short term, resulting in a prominent supply-demand imbalance. In this context, the prices of photovoltaic products have started to rapidly decline since 2023, especially since the second quarter of this year. The bidding prices for modules have repeatedly hit new lows, with module prices falling below 1 yuan per watt. The disorderly low price competition has greatly damaged the profitability of various enterprises. Silicon material leader TCL Zhonghuan (002129. SZ) has bluntly stated that the production capacity of various links in photovoltaic manufacturing is accelerating, and the supply and demand are further imbalanced compared to the second half of 2023. Wang Bohua, Honorary Chairman of the Photovoltaic Industry Association, also said, "I think the situation in the photovoltaic industry is very severe now. Prices have fallen too much, and several links have already fallen below the cost line
Faced with the risks brought by the sharp drop in prices across the industry, the disorderly expansion within the industry has begun to tighten. In July of this year, the official website of the Ministry of Industry and Information Technology announced that in order to further strengthen the management of the photovoltaic manufacturing industry and promote high-quality development of the industry, the Electronic Information Department of the Ministry of Industry and Information Technology has revised the "Photovoltaic Manufacturing Industry Standard Conditions (2021 Edition)" and "Interim Measures for the Administration of Photovoltaic Manufacturing Industry Standard Announcements (2021 Edition)", forming the "Photovoltaic Manufacturing Industry Standard Conditions (2024 Edition)" (hereinafter referred to as the "Standard Conditions"). The 'Standard Conditions' will curb the release of inefficient production capacity, reduce photovoltaic manufacturing projects aimed solely at expanding production capacity, and gradually clear out small and medium-sized production capacity that does not meet standards.
The most important "funding" ammunition for JinkoSolar has not been replenished in a timely manner. In July of this year, the company announced the termination of the 9.7 billion yuan private placement announced in August 2023. Of the proposed capital increase, 7.2 billion yuan will be used for the Shanxi 28GW integrated project, and the remaining 2.5 billion yuan will be used to supplement working capital. Regarding the failure of private placement, JinkoSolar explained that in the past year, there have been significant changes in the internal and external environment of the industry, as well as the supply and demand relationship of the upstream and downstream of the industrial chain, which have driven environmental changes in the capital market.
The cancellation of private placements has highlighted the issue of JinkoSolar's asset liability ratio. As of the end of June, JinkoSolar's asset liability ratio reached 73.11%. At the same time, the company's current ratio and quick ratio are 1.18 and 0.86, respectively, indicating significant financial pressure.
In terms of interest bearing liabilities, as of the end of June, JinkoSolar's interest bearing liabilities amounted to 22.8 billion yuan, accounting for 68% of its net assets attributable to the parent company. Among them, the non current liabilities due within one year in the interest bearing liabilities are 2.4 billion yuan, short-term borrowings are 3.7 billion yuan, long-term borrowings are 7.3 billion yuan, and bonds payable are 9.4 billion yuan.
In addition to its high debt burden, JinkoSolar also has hidden debts guaranteed by external parties. As of July 27th, the total amount of guarantees provided by the company to its controlling subsidiaries was 46.991 billion yuan, which is 1.4 times the company's net assets.
Faced with the cancellation of private placements, Jinko Solar, which has maintained a debt to asset ratio of over 70% for years, has also begun to be cautious. The company stated that it will maintain a cautious pace of expansion, prioritize the landing of advantageous production capacity such as the Shanxi base, and accelerate the elimination of outdated production capacity.
In order to regain its throne, JinkoSolar has chosen a more winding path. The cancellation of nearly 10 billion yuan private placements has left Jingke Energy's future path full of thorns.